Young Scrappy Money Podcast Ep. 014: Debt Strategies and 401(k) Loan Lessons with Ashley Patrick

Hope you enjoy this fun interview with financial coach Ashley Patrick, who dishes on paying back beaucoup debt, along with an estimate of how much her 401(k) loan really cost her (SPOILERS: it’s a LOT!)

Resources from this episode:

• Budgets Made Easy, home to Ashley’s work as a financial coach. You can also find her on Facebook, Pinterest, Instagram, Twitter, and YouTube!
• Dave Ramsey’s famous book, The Total Money Makeover.
• Michelle’s favorite debt payoff calculator, the Vertex42 debt spreadsheet, which has a great snowball calculator!
• The Young Scrappy Money Academy Digital Subscription Service
• Young + Scrappy, home to Michelle’s work as a financial advisor and financial coach

Full transcript:

INTRO: [00:00:00] Hello. And welcome to the Young Scrappy Money podcast. I’m your host, Michelle Waymire. And each week, I’ll be bringing you tips and tricks to help you take control of your finances as well as interviews with people who made big financial changes in their own lives. So join us. And we’ll help you get your financial s**t together.

MICHELLE: Hello, everybody. Welcome, welcome. This is another episode of the Young Scrappy Money podcast. And today, we are talking the D word, that four-letter word that stresses out so very many of us. I am talking of course about debt.

And debt is certainly one of those things. It’s a double-edged sword. Sometimes, it lets us achieve some of our dearest financial goals— buying a house, going back to school, starting a business. And sometimes, it’s just a source of stress and anxiety.

And so with me today is Ashley Patrick, who is an expert in this space. She is a Ramsey Solutions Master Financial Coach and owner of Budgets Made Easy. So she was a police officer for 10 years. Then she quit her job to stay at home with her three kids. Now, she helps families eliminate debt using simple strategies so that they can stress less. Welcome, Ashley.

ASHLEY: Hi. Thanks for having me.

MICHELLE: I’m so glad that you’re here. And I wanna talk to you— I wanna talk to you about debt. I’m excited to hear a little bit about your own debt journey as well as how you help others kind of— kind of get their financial house in order. So I think to kick things off, you know, I kind of gave folks the nutshell of your biography. But talk to me a little bit more about, you know, what your career looked like, how you made the decision to quit your job, and then what got you into financial coaching.

ASHLEY: Ooh, that’s a lot there. (LAUGHING) How I— how I decided to quit my job, that’s a— that could be a whole nother story.

MICHELLE: Tell us— tell us about your whole life.

ASHLEY: Yeah.

MICHELLE: Give us your whole history.

ASHLEY: So I was born— no, I’m kidding. Um, so basically, my financial journey and story, um, kind of begins in— oh gosh, when was it? So basically, we bought our dream home in 2012 I think it was. So it was 10 acres, beautiful house. But the problem was that the house had like a separate in-law suite that wasn’t connected to the house.

So like the main house was two very, very small bedrooms with this separate whole other living space. So it was connected to the garage, but not the main house. So we moved in November 2012. January, found out I was pregnant with our second child. And we realized, we don’t even have a space for another child, um, in the main house.

Because I mean, like, the bedroom, the one extra bedroom we had, barely fit a crib. It really should’ve been a closet. But so we decided that we needed to connect this main— this second living space to the main house. And we could do that fairly easily the way the house was laid out. We just had to enclose a covered porch.

So we decided— or we were looking at our options on how to afford this. Because our house was pretty expensive. We had just bought it. So there wasn’t really a whole lot of equity in the house. And we didn’t want to— we wanted to make the best financial decision like how to pay for this.

So my husband talked to people that he worked with that he thought were financially savvy. And, you know, everybody was telling him, take out a 401(k) loan. You’re paying yourself back. It’s low-interest, you know, not a whole lot of risks with it, um, things like that. So that summer, that’s what we decided to do.

We took out a $25,000 401(k) loan to make this addition to our house to make it functionable for our family. Well, as soon as we took out the loan, I went, and I checked the 401(k) count to see, you know, kind of what was going on with the 401(k), make sure everything went out. Because I thought it was just a loan that used the 401(k) as collateral.

And when I looked at the balance, I was freaking out. Because they actually took the money out of the 401(k). Like I just thought it was a loan that used it as collateral. So then once I saw that, I realized, oh my goodness, what’s going on?

ASHLEY: So we checked with—

MICHELLE: Yeah.

ASHLEY: Yeah, oh my gosh.

MICHELLE: That’s a rude awakening.

ASHLEY: Ugh, yes. So I checked with everybody, like— no, they’re like, no, they take the money out. And then you pay yourself back. And so, you know, it was already a done deal at that point. We were like, we didn’t really have a whole lot of other options to do the remodel. So we just went with it, even though, you know, I knew that we were losing all that compound interest. Because, like, the money wasn’t in there anymore.

So that was over the summertime. Um, and then that following September, we had our second child. Life went on. I was on maternity leave, came back to work I think December, sometime in December toward the end of the year.

[00:04:58] And then like the first week of January the next year, I come home. I was late for whatever reason. And I probably got a call or, you know, something at work, so a very stressful job. I was a detective. And I worked a lot of serious crimes. So I get home.

And my husband’s already home. And I can tell by the look on his face that something’s wrong. But my husband’s a jokester. So sometimes he just messes with me, and I can’t really tell.

MICHELLE: Yeah.

ASHLEY: Like when he’s joking and when he’s being serious. Even though we’ve been together for like almost 20 years, I still can’t tell sometimes. So he just looked— I’m like, oh my goodness, what’s going on? So he’s like, I lost my job.

And I was like, no, you’re kidding. And then he’s like, nope, for real, I don’t have a job anymore. And so then, you know, we’re obviously all upset, figuring out what to do. That was January.

So I think like less than a month later, we get a nice little note in the mail saying that we have like I wanna say it was 90 days— which it’s usually 60 or 90 days depending on where you work— to pay back this— you know, at that point, it was still like $20,000 of our 401(k) loan. Hey, you’re jobless. Now pay us $20,000.

MICHELLE: Oh, no. That’s the worst timing.

ASHLEY: Uh, yeah. So, you know, that was a bit of a shock. And, you know, he didn’t have a job at that point. You know, we had our savings to get us through till he found a job. And I certainly wasn’t gonna give it to them. I didn’t even have that much anyway.

So, you know, it was kind of like, well, I gotta feed my kids or pay back this 401(k) loan. So we didn’t do anything about it. Then, the following year for tax time, which would’ve been, oh goodness, 2015 I believe it was, we got a nice bill, or letter, in the mail saying that it was gonna count as income basically when we did our taxes.

MICHELLE: Yeah.

ASHLEY: So— yes.

MICHELLE: Most people don’t realize that, you know, you kind of know the— did you get hit with a 10% penalty as well?

ASHLEY: Um, I believe so. I think it came out at tax time. Because we were supposed to get— so I did our taxes like myself and didn’t add in the, um, that form so I could see kind of like what we should’ve gotten. And we should’ve gotten like $4,500 or somewhere in that range back. And then when I put that in there, we owed like $6,500. So it cost us like 10 grand on our taxes.

MICHELLE: Yeah.

ASHLEY: Because it bumped us up to the next tax bracket too because it was such a large amount. It was like $20,000 at that point. So it bumped us to the next tax bracket, plus the penalties and fees and whatever else that was tacked onto that. So it cost us a lot of money just at tax time.

So and I actually figured it up not that long ago, between the taxes and then what we lost in compound interest. Because we were really young when we did this. We were in our 20s. And, you know, it was $25,000 that we took out, ended up— you know, we paid back some of it. But, you know, it was $20,000 that we took out of our 401(k) basically. And at our retirement age, that cost us almost a million dollars just—

MICHELLE: Wow.

ASHLEY: Yeah, just from the compound interest because we were so young when we took it out. Like it was insane.

MICHELLE: Yeah. I actually get this question from folks a lot. Because it always sounds like such a justifiable reason. It’s like, well, I need a new home. Or, we’re buying our first property. This is such an important step of our financial journey. Or, the big one that I hear is like, well, this is gonna build so much home equity. It’ll be so easy to make the money back.

And that’s what people don’t realize. Exactly like you said, it’s not just about the penalties and the taxes. But the impact of the compound interest if you don’t pay yourself back on time is— is staggering.

ASHLEY: Yeah.

MICHELLE: A million dollars, wow.

ASHLEY: Yeah. I was a little shocked when I— (LAUGHING) sometimes I wish I wouldn’t have did the math. But, you know, it was like, it is what it is. And, you know, hopefully my story can warn people about not taking out a 401(k) loan. Because no matter how tempting it seems or how good it seems, like, oh, you’re paying yourself back. And, you know, if you lose your job, you’ll be in a lower tax bracket because you won’t make as much money.

Well, no, that’s not— that’s not necessarily how it’s going to work unless you planned on not getting a job, you know, for the rest of the year or whatever. It might— it might be lower. But, for me, it bumped us to the next tax bracket. So it actually didn’t— didn’t do that at all. And so, you know, it’s just not— not a good idea.

And not to mention that you’re tied to that job. Like if you can’t pay it back, and you wanna change jobs, you’re— you’re stuck until you can pay it off. Because if you leave your job, you can’t roll it over either. Like you have to pay it back. So you can’t just quit and go somewhere else either.

MICHELLE: Oh, wow, yeah.

[00:09:50] ASHLEY: So you’re stuck. And usually the loans are like five years. So unless you can pay it back, depending on how much you have left that you owe, and you wanna start a new job, you’re stuck unless you wanna take the tax penalty and lose all that compound interest and all that too. So it’s just not— it’s just not a good idea to do. Find another way to do whatever it is that you wanna do with that money.

So that was— let’s see. So we did our taxes like March. I think I’m always late with doing my taxes. I don’t know why. And I always get a refund. But for some reason, I still wait till the last minute. I just don’t wanna deal with it. So—

MICHELLE: I mean, sometimes it takes me— you know, I like finally get all my paperwork and my forms from all of my various jobs and financial institutions in like mid— you know, mid-March. So if you get your forms late, as long as you’re not, you know, super late on everything.

ASHLEY: Yeah. Usually, I just procrastinate because I don’t wanna deal with it. But, yeah, I have to go—

MICHELLE: As long as you skate in before that deadline. No shame in that game.

ASHLEY: Yeah, just— you know, just fingers crossed I actually get my refund. Because you know when you wait too long, and you get a refund, and you might have to wait even longer? So thankfully, I haven’t had any issues on that. But, yeah, so did my taxes. And of course since we owed, we waited till the last minute that year obviously to pay. So probably like the day before tax day, I actually paid it.

But what I ended up doing— and this is kind of what sets off my whole journey— is— we didn’t want— we had a little bit in savings, but we didn’t wanna use that, you know, just in case my husband lost his job again or something like that. Because he— he had a very secure job. Like this came out of nowhere. Like we did not expect this at all.

So now, you know, we’re even more scared because he’s fairly new at his new job. So we didn’t wanna use any of our savings. So we decided to put what we owed for the taxes onto a introductory, 0% interest for 18 months credit card. And so we did that.

And then for whatever reason, like I— I don’t know why I thought this. Like even I knew better. But I don’t know what my train of thought was. But so for some reason, I had it in my head that I wouldn’t have to make the payments every month until the 18 months. So I was just gonna pay on it as I got money. (LAUGHING) And—

MICHELLE: Oh, no.

ASHLEY: I know. I don’t know. I really still don’t know what I was thinking. So then the next month, you know, I started getting the monthly bill. It was like 60 bucks or something like that for the credit card.

And I’m like, oh, I gotta fit this in my budget now. And how am I gonna pay this off in 18 months? So I was like, hmm, because this minimum payment’s not gonna pay it off in that time. So that started me on the journey for debt payoff plans.

And I believe it was, uh, around May I found Dave Ramsey, and the debt snowball, zero-based budgeting, and all that stuff. So I ordered The Total Money Makeover. And I read it in like two days I think it was. Like I was just hooked.

So that really— that started our journey. You know, I got the zero-based budget. Because before, I had always done a budget. But, you know, whatever was left over, we just spent. Like and I don’t even know what it was on.

So when I started the zero-based budget and went back and tracked our expenses for like the last month, I was shocked. Like my— I think our budget for food was— you know, on paper what I thought we should be sticking to was— I don’t know— let’s just say $800, which was still high. Because we were a family of three with a newborn that breastfed. So she didn’t even have any really any food expenses.

And so we were actually spending like $1,200 a month. And most of it was eating out. So I was spending like $300 every other week or more at the grocery store. And then we were still eating out for like breakfast, lunch, and dinner like all the time.

MICHELLE: Yeah.

ASHLEY: I was like, what are we doing? (LAUGHING) This is so stupid.

MICHELLE: Yeah.

ASHLEY: Like, oh my goodness. So that was like—

MICHELLE: Can I actually get you to take a step back for me though? Because so, you know, if folks are listening, and they’re not necessarily familiar, a lot of us kind of know the name Dave Ramsey. I mean he’s kind of a household name in the financial services industry. Um, and I’ll be honest. There are definitely some key differences in the way that he and I approach personal finance, definitely some— some things that I wouldn’t necessarily recommend to folks, ideas that differ from my own.

But I do think the two things that you mentioned are arguably two of his best and most useful ways of thinking about money. And that’s the zero-based budget and the debt snowball. So before we kind of get into those and a little bit more about how those changed your life, can you just, you know, walk us through kind of some basic definitions?

ASHLEY: Sure. The zero-based budget is basically planning for every single dollar. So on paper, at the end of the month, it looks like you have zero dollars left because you’ve planned in your budget every single dollar. Now, you don’t actually have zero left. Because you’ve got, you know, savings funds for different things and money towards your goals, your debt, or whatever. And so you should have, you know, a little bit of a cushion, so to speak, in certain accounts or cash envelopes, which I can explain all that as well if you want me to.

[00:15:03] But basically, on paper, it looks like you have zero dollars left because you have planned every single dollar. So before, what I would do is I would write down my income and expenses, you know, kind of what I planned. You know, I paid myself first. I had savings automatically. So I wrote that down as a bill.

But then, you know, we would have so much money left over at the end of the month. And then it would just— we would just spend it on whatever we wanted basically. But with the zero-based budget, what is, quote unquote, “left” you actually plan for. So whether it’s saving for things like Christmas, or vehicle fund, house fund, debt, savings, whatever you— whatever your goals are and whatever you need to set aside for each month so at the— on paper, at the end of the month, it actually shows zero. So you’re intentional with every single dollar.

MICHELLE: Yeah. That’s wonderful. Um, and then talk about the debt snowball real quick. Because, again, I think most people have kind of heard of it but might not necessarily be familiar with the details about how it works or how you’d implement it.

ASHLEY: Sure. So with your zero-based budget, like I said, you’re intentional with every single dollar. So whatever you set aside would go toward your debt snowball. And what your debt snowball is is basically you list out all your debts from smallest balance to the largest balance. It doesn’t take into account interest rates unless some of the debt balances are very close, very similar in amounts. Then, you can take into account other things.

But basically, the debt snowball is all about the actual balance. So you list it from smallest balance to largest balance. And then all your extra money that you have on your zero-based budget— so you’ve got what you need to cover. And then whatever is, quote unquote, “left” would go towards your debt snowball.

And so you put it all toward the smallest balance first. So you pay minimum payments on everything except that smallest balance. Everything extra goes towards that smallest one. You will get it paid off very quickly. Because usually, you know, it’s a small— you know, it’s your smallest balance.

So hopefully, it’s, um— you can get it paid off very quickly. And it gives you that quick win. And so once you get that smallest balance paid off, everything extra and that minimum payment rolls into the next balance, and then the next one, and the next one. So then it just builds and builds and builds like a snowball.

And so once you get to your very last debt, which should be your biggest balance, you should have a good-sized snowball to throw at it every single month. Because you’ve got all those minimum payments from your other debt plus all your extra. And it’s all going toward the one, um, the one debt.

So what I really loved about doing the debt snowball was, one, it’s very motivating because you get the quick wins. And you get to get that debt outta your life for good. But it also— I get very easily distracted. And I like my budget to be simple. I don’t like to overcomplicate it.

So I like to focus on one thing at a time. And what the debt snowball does is you just focus on that one thing. So you, um— whenever you’re doing this, the first step is saving $1,000 so if something, a minor emergency, comes up, you can cover that. So you don’t have to worry about saving at that moment.

You’re just focused on the one debt. So you’re not trying to focus, and think about, and pay off five things at once. It’s one thing at a time. And just for my brain, that’s— that worked for me. And it worked very, very well.

MICHELLE: Yeah. That’s great. And I think it is important to emphasize— and you said this already— that, you know, the goal is that you are obviously making minimum payments on everything. But then just all the extra money goes towards the smallest one.

ASHLEY: Right.

MICHELLE: And then one other thing that I’ll say about this approach that I just wanna highlight, again kind of reiterating what you said, I think this approach is really interesting. Because a lot of people, when they get to the point where they pay off a debt, they’re just like, woo hoo, that’s one less payment. So now I have more money in my budget or more money available for spending.

But the goal of this particular approach is if you pay off a debt that had a minimum payment of $100, you’re still taking that same $100 and putting it towards debt. You’re just putting it towards a different debt. So it’s not like you’re sort of freeing up money in your budget every single month.

It’s more along the lines of, you’re committed to paying this one total amount towards debt. And then as you pay off more and more debts, it just means that that amount goes to fewer and fewer. So it’s just like all chunked together. Is that right?

ASHLEY: Yes, perfect.

MICHELLE: Sweet.

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MICHELLE: All right. So you— you learned the zero-based budget. And you learned the debt snowball. And so how did you get into financial coaching then?

[00:19:50] ASHLEY: So once my friends and coworkers saw, like, how excited I was and how fast I was paying off this debt, they wanted to do it too. So I had several people ask me and ask me for help and guidance and, you know, what they should do too. And so that really led me to want to help the most people I could.

And so that led me to starting a blog. And so my blog, Budgets Made Easy, I started in January 2017 so I could help the most people. You know, it’s faster and easier than one-on-one and shared this information. Because I got the same questions over and over. So that’s kind of what I did is I shared, you know, the information that people were asking me.

And then I decided— a lot of people started asking me to help, like specific one-on-one help with their budgets and things like that. So then that led me to financial coaching and where I am today. So that just— it all started with that 401(k) loan. But it’s got me here.

MICHELLE: Yeah. That’s awesome. So when we— when I first sort of gave folks your bio, you know, this is— this is something that you had previously told me is that your goal is to help families eliminate debt using simple strategies so they can stress less. And so we talked about the debt snowball, you know, being one of those strategies. What other recommendations or pro tips would you give somebody who’s listening who’s looking to pay down a bunch of debt?

ASHLEY: To do your budget. I know people hate the word budget. They don’t wanna do it. It stresses them out. It overwhelms them. They don’t know where to start.

But everything is built on your budget. So that’s what I kind of focus on first. Because everything starts there and then moves up to paying off debt, building wealth, you know, building your emergency savings, all that stuff. But it all starts with your budget.

So what I do, and what I teach people, is to just take one little step at a time building your budget so that you’re not overwhelmed. So I actually break it up into like six days. Um, I’ve got an email budget course that I go through. And it just breaks it down into little, simple steps.

So it’s less overwhelming, and it’s less stressful when you just think about doing one thing at a time for each day instead of trying to do it all at once. So breaking down your budget, tracking your expenses— like I said, you know, I was spending so much money on food and eating out. So the way to figure out where your money’s going so you know where you can cut and where you can improve in your budget is to see where your money’s been going.

It really helps change your mindset as well. Just like for me, it was like, wow, I didn’t even realize we were spending that much money eating out and on food. And so that’s where you can kind of start to change your mindset and make little changes.

And I also recommend not to try and change everything at once. Like you don’t have to jump in both feet, like I do with everything. (LAUGHING) I just— I just go full steam ahead with everything. So, you know, take baby steps.

You know, if you’re going to Starbucks five days a week, you don’t have to completely cut it out. Like just cut it back to four days, then three days, then two days, you know. And then treat yourself when you want it. Making your budget doesn’t have to be dreadful.

You know, you just have to budget in the fun stuff. If you want to go to Starbucks two, three times a week, put it in your budget. You just have to remind yourself that that money— you only have so much money every single month. So if you’re spending so much money on clothes or eating out or drinks or whatever, that’s money that’s not going toward your long-term goals.

So— but that doesn’t mean you have to completely cut it out. You need to have some fun, or you’re not gonna stick with it. Like if it’s just like you’re sitting at home every single weekend with nothing to do, that’s not any fun. And your budget doesn’t have to be that way. Your budget is what it is. It’s what you make it.

So budget in some fun money. Budget in some, you know, just spend whatever you want on whatever you want money. You know, that is perfectly fine. And that will help keep you motivated and to be able to stick with it in the long run.

And that’s really the goal is to change your mindset, change your behaviors. But that takes time. And so just take little baby steps in the right direction. And keep going. And you will eventually get there. You don’t have to jump from zero to 100.

MICHELLE: Yeah. I love that advice because, I mean, it sounds like we have something in common here. I’m kind of the same way, that if I decide that I wanna do something, I like kick down the door. And I’m like, let’s do this.

ASHLEY: (LAUGHING) Yeah.

MICHELLE: But then the problem with that approach is then if like one little thing goes wrong, or I mess up one day, then I’m like, oh, this is all ruined. It’s not perfect anymore. And I think budgeting is the same way for most people. We get in this mindset where we think it’s all or nothing.

We’re either this perfect paragon of spending bliss, or we’re a completely out of control money monster. And it doesn’t have to be that way. Exactly like you said, you don’t— you don’t have to do an all or nothing. Even a little bit of good change is better than nothing at all.

[00:24:55] ASHLEY: Exactly. And I still screw up my budget from time to time. And it’s been the same for like two years now— actually for the last year because I’ve stayed home for the last year and a half. And so my budget is basically the same month to month. Of course, you know, you have to make little changes for each month.

But overall, it’s the same. And last month, I totally screwed it up because I screwed up my checkbook register. So, yeah, we can go into more detail about that if you want. But, yeah, even if I still make mistakes.

And I’ve been, you know, following the zero-based budget for almost four years now. So, you know, nobody’s perfect. You’re gonna make mistakes. The point is just to keep moving in the right direction, pick yourself up, learn from it, and move on.

MICHELLE: Yeah, totally. I also like one of the other things that you and I had previously talked about. So you actually have a bachelor’s in psychology. Is that correct?

ASHLEY: Yes.

MICHELLE: So I’m— you know, I’m a huge money nerd, obviously. And I love the psychology of money. What can you tell us about some of these mindset tricks or kind of understanding how it is that we make some of the financial decisions that we make?

ASHLEY: Well, you know, it all goes back to childhood. (LAUGHING)

MICHELLE: Come. Sit on my couch, listeners.

ASHLEY: Yeah.

MICHELLE: Let’s talk about your parents. But, you know, sometimes actually, I’ve found in coaching, you do have to talk about your parents.

ASHLEY: Yeah, you do. Uh, so, you know, it really does go back to kind of how your parents handled money. And it could be good or bad. Like they handled it good, and you learned from that. Or, they handled it bad, and you learned what not to do. So, you know, it could be that.

It’s really about your community and who you surround yourself with. You know, they say you become— oh, I forget the number. You know, you become like the people that you hang around, the closest people. So if you hang around— which could even be your friends and your family, your parents, whoever. You know, if they’re bad with money, then that can rub off on you and things like that.

So it’s really just about changing— trying to change your mindset. And that can take, you know, 90— up to 90 days to make a new habit. And so your budget is about creating habits. It’s about creating plans.

And I really recommend making a written budget. So I know some people like apps. Some people like spreadsheets. If you’re gonna use those things, I still highly recommend that you write it out. Because when you write something out, like a goal, which a budget is a goal for your money, you’re like one and a half times more likely to achieve it.

And so even if you transfer all that information to a spreadsheet or an app or whatever, still write it out first and then transfer it. So that will really help you create new habits. It’ll help you stick to your money goals and help you actually be successful with your budget. So that’s something that I recommend to everybody.

MICHELLE: Yeah. That’s wonderful. I like that. So what other— you know, now that we’re here like getting into the good brain pickings, what other kind of budgeting, debt, financial advice would you give anybody who’s listening?

ASHLEY: Ooh. Um, you know, decide what your priorities and what your goals are. So you really have to think— you know, what’s your five-year goals? But then you have to actually break it down.

OK, what’s your goal for just this year? And then break it down into bite-sized chunks, into what— all right. To get to there, what do I need to do this month? Or, what do I— and what do I need to do this week? And what do I need to do this day?

You know, you can’t just say, I wanna save money. That’s not specific enough. So say, I want to save $30,000 in the next two years. OK, well, how much do you need to save for one year? How much do you need to save each month? How much do I need to save each paycheck to get there?

So it’s— you know, you have to make your goals specific and measurable in order to get there. And then fit it into your budget. You know, it may not even be that. You may wanna just go on vacation. You wanna travel somewhere you’ve never been. And let’s say it’s gonna cost $5,000, and you wanna do it next year.

Well, how much do you need to save and set aside in your budget to be able to pay for that ahead of time? Your budget is all about your priorities and what’s important to you right now. So, you know, some people— I’ve talked to some people that they don’t care about paying off their student loans. They’d rather do other things with that money.

So just decide what your priority is and do what you need to do to get there. You know, just break it down into every paycheck. How much do I need to save every paycheck to be able to meet this goal?

Um, you know, make visuals. I did that a lot. That’s very motivating. So I have like a little debt thermometer that I used when I was paying off my student loans. And I just filled it up as I paid it off. And I would look at it.

It was actually in my closet. So every day as I was going to work, putting on my uniform, I would look at it. And it just kind of helped motivate me for that day, like kind of reminded me of what my long-term goals are and what I needed to do like each day. So find what works for you.

[00:30:03] Find a community. You know, I was part of a lot of Facebook groups that were full of people paying off debt. So, you know, find somebody to talk to that is going through the same things as you. Because sometimes your family and your friends are gonna think you’re crazy. They’re not gonna be very supportive. They may be very, um, bad influences, trying to get you to do things that don’t go along with your long-term goals.

So find a community where you can share those frustrations and stay motivated. You know, and just find what works for you. What works for you may not work for me. Everybody processes information differently. And some people are visual learners. Some people are auditory learners.

So, you know, just find what works for you. And then once you find it, just stay on that course and keep doing what you’re doing. Don’t get distracted. Just take little steps to get there. And just keep going.

MICHELLE: I love that. You hear that, guys? Just figure out what you wanna do. Figure out your little steps to do there. Surround yourself with good influences. And make that s**t happen.

I love it. (LAUGHING) Awesome. Well, Ashley, thank you so much. I totally appreciate you taking the time to chat with us about your own debt journey and some of the tools that helped you get there.

ASHLEY: Well, thanks for having me.

END CREDITS: I hope you enjoyed this episode of the Young Scrappy Money podcast. If you want to read about my work as a financial advisor and financial coach, you can do so at www.youngandscrappy.com. That’s www.youngandscrappy.com. Thanks again for listening.